Mon, Jan 27, 2014

AIFMD: Hedge funds drag their feet over EU regulation deadline

Failure to register and comply with AIFMD requirements could limit fund managers and expose them to searching questions from investors, yet a survey revealed that fewer than 20% of funds have filed the relevant documents.

Despite the postponement of the January 22 deadline by 6 months, many have asked why the industry has been dragging their feet and how this could ultimately impact the overall governance requirements.

In a FTfm article, experts speculate that a series of obstacles stand in the way of the industry sorting its act out. The directive requires all alternative funds marketed in Europe to meet stringent levels of disclosure and governance, in many cases requiring companies to introduce or seriously beef up their risk-management function, as well as making their marketing and communications much more detailed.

The question also looms as to who will ultimately bear the additional costs for funds to meet the new requirements under AIFMD. Director John Griffiths of the London Regulatory Compliance team is confident the industry would have to absorb the costs, as well as meeting the summer deadline. Even among the undecided half of survey respondents, none  thought they would be able to pass all the costs on to investors. Whoever pays for compliance, the cost of missing the deadline is likely to be high. “It is imperative they address this issue,” says Mr Griffiths in the article. “If they are not approved, they will not be able to market in other European jurisdictions.”

To read the full FTfm article, please click here.

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